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WASHINGTON (4/9/12)--The Federal Reserve has amended its Regulation D, which governs reserve requirements of depository institutions, in a bid to simplify those requirements and reduce costs.

According to the Fed, the amendments simplify reserves administration by:

Creating a common two-week maintenance period for all depository institutions;

Creating a penalty-free band around reserve balance requirements in place of carryover and routine penalty waivers;

Discontinuing as-of adjustments related to deposit revisions;

Replacing all other as-of adjustments with direct compensation; and

Eliminating the contractual clearing balance program.

The Fed said the amendments will be implemented in two waves. The contractual clearing balance and direct compensation changes will take effect on July 12. The remaining amendments will take effect on Jan. 24, 2013.

The Fed added that it would notify financial institutions by Nov. 14 if it decides to delay the Jan.24 effective date further.

Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said CUNA supports the changes and the Fed's decision to use staggered effective dates.

The Fed has also amended Regulation J (Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers through Fedwire) to eliminate references to "as-of adjustments." These changes will take effect on July 12.